“Grand spiral galaxies often seem to get all the glory. Their young, blue star clusters and pink star forming regions along sweeping spiral arms are guaranteed to attract attention. But small irregular galaxies form stars too, like NGC 4449, about 12 million light-years distant. Less than 20,000 light-years across, the small island universe is similar in size, and often compared to our Milky Way's satellite galaxy, the Large Magellanic Cloud (LMC).

Click image for larger size.

This remarkable Hubble Space Telescope close-up of the well-studied galaxy was reprocessed to highlight the telltale reddish glow of hydrogen gas. The glow traces NGC 4449's widespread star forming regions, some even larger than those in the LMC, with enormous interstellar arcs and bubbles blown by short-lived, massive stars. NGC 4449 is a member of a group of galaxies found in the constellation Canes Venatici. Interactions with the nearby galaxies are thought to have influenced star formation in NGC 4449.”

“Of an evening blackbirds congregate in the tree below in Ballybeg. Flocks of blackbirds. We can hear their raucous disquisitions here on the hill. In their black academic gowns, their fluttering sleeves. What are they debating? The "Summa Theologica?" Pascal's "Pensees?" Newton's biblical arcana?
․

"The blackbird whirled in the autumn winds.
It was a small part of the pantomime..."

Those solitary desert fathers, the corncrake and the cuckoo, in the field and on the heath, are gone, victims of mechanical agriculture, with their elemental messages "Repent" and "Praise." And in the trees by Lizzie's barn the gregarious blackbirds gather, in their hundreds, like chattering students flocking around Abelard at the medieval University of Paris, contesting finer points of rhetoric, splitting hairs, defining terms, their black gowns flapping in the wind.
․

"I do not know which to prefer,
The beauty of inflections
Or the beauty of innuendos,
The blackbird whistling
Or just after."

There are only, really, those two messages- "Repent" and "Praise." Repent what we have obliterated. Praise what remains.

The blackbirds lift up en masse from Lizzie's trees, cry out their syllogisms, then settle again, mortar boards half-cocked, hoods askew. Chapter and verse. Objection and refutation. A cacophony of contentious cogitation.
․

"I know noble accents
And lucid inescapable rhythms;
But I know too,
That the blackbird is involved
In what I know."

And I listen, when the blackbirds have gone home to roost, for the plaintive cry of cuckoo, content to whisper its self-deprecating name, and the corncrake, hiding in the tall grass, hazarding a guess in its raspy voice.”

“The universe does not revolve around you.The stars and planets spinningthrough the ballroom of spacedance with one anotherquite outside of your small life.You cannot hold gravity or seasons;

even air and waterinevitably evade your grasp.Why not, then, let go?

You could move through timelike a shark through water,neither restless or ceasing,absorbed in and absorbing the native element.Why pretend you can do otherwise?The world comes in at every pore,mixes in your blood beforebreath releases you into the world again.

Did you think the fragile boundary of your skincould build a wall?

Listen.

Every molecule is humming its particular pitch.Of course you are a symphony.Whose tune do you think the planets are singingas they dance?"

"When we dumb ourselves down, we sell ourselves short and lose an opportunity to shed light where it is needed. The ability to go into any social situation and sense the level of consciousness in that situation is a gift. It enables us to move considerately in a world that holds people of all levels of awareness. However, there is a difference between shifting our energy to accommodate people and dumbing ourselves down to a regrettable degree. Sometimes, when we get into a particular social situation, we may feel pressure to play it small in order to fit in. Perhaps everyone is drinking or smoking excessively, engaging in gossipy small talk, or complaining bitterly about politics. It is one thing to notice this and modify our expectations and another thing entirely to join in.

When we notice where people are coming from and acknowledge to ourselves that their energy is not in alignment with ours, we have several choices as to how to proceed. One viable option is to quietly endure the situation, keeping to ourselves until it is time to leave. In this way, we take care of our own consciousness and protect our growth process. Another option is to interact in a way that honors and pays respect to the people in the group, while gently attempting to shift the level of consciousness with our input. In order to do this, we must maintain our own vibration, which means that joining in by dumbing down is not an option.

When we choose to dumb ourselves down to fit in, we not only sell ourselves short but we also lose a possible opportunity to influence the situation for the good of all concerned. Our desire to join in may come from our natural yearning to feel connected to the people around us. There is no shame in this, but being able to stand on our own, separate from the crowd, is a powerful milestone on any spiritual path. It can be difficult in the moment, but when we arrive on the other side, our integrity intact, we may find ourselves feeling positively smart."

“The market stumbles these days and a rainbow forms in the skies over Wall Street. Just another chance to buy the dips. The Dow’s up about 200 this week after last Friday’s health care adventure. And why not? For eight years dip buyers have been rewarded royally for their efforts. Will this time be different?

It was John Templeton - Sir John Templeton - who said bull markets are born on pessimism, grow on skepticism, mature on optimism... and die on euphoria. Eight years in... has this bull market finally passed the optimism phase, and entered euphoria?

We consider one possible sign today. Think of the crash of 1929 and what springs to mind? Shoeblacks, paper slingers, taxi hacks, all giving the hottest stock tips? Yes, maybe that. But also something else… margin buying. Investors borrowing money to buy stocks. Buy now, pay later. (And pay they would.) Margin buying became so common that by the time the crash came along, some 90% of the purchase price of a stock was made with borrowed money. A fellow with $1,000 could try his luck with up to $10,000 worth of stock.

Then the crash. Margin buyers not only lost their button-downs with their Windsor-knot ties… they were in hock for every last cent they borrowed. In a word, ruined. Most stayed ruined.

We mention this only because The Wall Street Journal brought us up short yesterday with a stray item of news, a passing item almost lost among the indrift. It said margin debt hit a record high last month. Investors borrowed $528.2 billion against their brokerage accounts, according to the latest the New York Stock Exchange data, out Wednesday. Margin debt was $513.3 billion in January.

The Journal further informs us that “the previous record high for margin debt was $505 billion in the spring of 2015” - just ahead of the August correction that sent stocks careening more than 10%. “A steep rise can indicate that investors are losing sight of market risks and betting that stocks can only go up,” says the Journal in words too obvious for print. “Margin debt has a history of peaking right before financial collapses like the ones in 2000 and 2008,” warns the Journal.

Just so.

Then this question: Are today’s margin buyers simply tugging on Fate’s cape, courting Her wrath? John Hussman of the eponymous Hussman Funds argues that current stock valuations now rival their 2000 peak. He also says they’re “more than double the historical norm, and about 160% above pre-bubble norms.”

What kind of losses could return valuations to their historic norms? “Put simply,” warns Mr. Hussman, “the U.S. equity market could lose $17 trillion in value - over 50% of its market capitalization - even without taking reliable valuation measures below their historical norms.”

For emphasis: “We estimate that roughly half of U.S. equity market capitalization - $17 trillion in paper wealth - will simply vanish.” Come the day, we only hope the windows are nailed shut. More than a few unexpected visitors “dropped in” on Wall Street in October ’29.

But not everyone is concerned about today’s record margin-buying. One Jeff Mortimer, for example, directs investment strategy at BNY Mellon Wealth Management. Quoth he: “This isn’t a signal to me that markets are reaching an exuberant level like they did in the 1920s or 1990s, when speculation was rampant. What our clients are doing is borrowing against the portfolios because interest rates are so low. They’re not leveraging up because they see the market exploding to the upside; they’re using leverage because they can pay it off at any time.”

This time is different. Of course. It always is. But who knows… maybe this Mortimer fellow is right. Maybe this time is different. And maybe this time Lady Fortune scatters Her blessings their way. But this lady sure is fickle.”

"There is an Eastern tale that speaks about a very rich magician who had a great many sheep. But at the same time this magician was very mean. He did not want to hire shepherds, nor did he want to erect a fence about the pasture where the sheep were grazing. The sheep consequently often wandered into the forest, fell into ravines and so on, and above all, they ran away, for they knew that the magician wanted their flesh and their skins, and this they did not like.

At last the magician found a remedy. He hypnotized his sheep and suggested to them, first of all, that they were immortal and that no harm was being done to them when they were skinned; that on the contrary, it would be very good for them and even pleasant; secondly he suggested that the magician was a good master who loved his flock so much that he was ready to do anything in the world for them; and in the third place, he suggested that if anything at all were going to happen to them, it was not going to happen just then, at any rate not that day, and therefore they had no need to think about it. Further, the magician suggested to his sheep that they were not sheep at all; to some of them he suggested that they were lions, to some that they were eagles, to some that they were men, to others that they were magicians. After this all his cares and worries about the sheep came to an end. They never ran away again, but quietly awaited the time when the magician would require their flesh and skins."

"In a Leningrad university classroom in the early 1920s, as the professor drones on about orthodox Marxist theory, a young woman with an intense gaze is writing furiously in her notebook. The woman is Alisa Rosenbaum, later to be famous as Ayn Rand, and her jottings do not concern the relationship between dialectical materialism and the dictatorship of the proletariat; they are notes for a play to be called Ego, about the rediscovery of individuality in a totalitarian society based on the worship of the collective. Over a decade later, having escaped to the United States, Rand would complete the story — now a novella rather than a play — and publish it in 1938 under the title "Anthem".

"Anthem" is perhaps the only work of Rand’s in which the influence of Russian symbolism is greater than that of French romanticism. In its stark, formal style, devoid of colloquialism, and minimalist in characterization, plot, and descriptive detail, Anthem is strikingly different (apart from brief passages in longer works) from anything else that she wrote; it represents a vision stripped to the bare essentials, to the sheer power of simplicity. Its cadences are at times biblical (e.g., “I guard my treasures: my thought, my will, my freedom. And the greatest of these is freedom”). Indeed, while the book is usually described as a novella, Rand confided to fellow novelist and libertarian theorist Rose Wilder Lane that she thought of "Anthem" as a poem; and the very title suggests a sacred song of praise or devotion, in this case to the unconquered self.

The book’s most striking feature, both stylistically and in the substance of the story, is the absence of the first-person singular. The idea of a totalitarian state suppressing subversive ideas by banning or distorting the language needed to express or even formulate it has been made generally familiar by George Orwell’s "Nineteen Eighty-Four," with its fictional language, “Newspeak”; but Rand’s treatment precedes Orwell’s by more than a decade (and may possibly have influenced it).

In Rand’s dystopia, the first-person singular pronoun — the word “I” — has been abolished in order to prevent people from thinking of themselves as individuals with identities distinct from that of the collective. The struggle of Equality 7-2521 (Rand modeled her characters’ names on telephone exchanges of the “Pennsylvania 6-5000” form) to discover his own individuality is mirrored in his, and the text’s, struggle to move from “we” to “I.” (And Liberty 5-3000’s groping after singular pronouns in her declaration “We are one… alone… and only… and we love you who are one… alone… and only,” while it anticipates the statement in The Fountainhead that “To say ‘I love you’ one must first know how to say the ‘I,’” also implicitly raises the question whether the loss of the distinction between singular and plural second-person forms in standard English should be seen as likewise problematic, y’all.)

Again like Orwell, Rand would later go on to analyze the political abuse of language in her nonfiction as well, describing “extremism,” for example, as an illegitimate term, or “anti-concept,” designed to blur the distinction between thoroughgoing advocacy of freedom and thoroughgoing advocacy of violence and authoritarianism.

Another distinctive feature of Anthem is the impoverished, nearly primitive nature of the society it depicts — one where the candle is a relatively recent discovery, the inventors of which (a committee, of course) are immortalized in paint on the walls of the Council of Scholars. In most dystopian novels — whether those that preceded "Anthem", such as Zamyatin’s "We" and Huxley’s "Brave New World", or those that came later, such as "Nineteen Eighty-Four" and Bradbury’s "Fahrenheit 451" — the totalitarian regime is depicted as commanding a vast array of high-tech tools for surveillance and manipulation.

But for Rand, the functioning of industrial civilization requires individual initiative and free exchange; any society that suppresses these as thoroughly as the one in "Anthem" does would pay the price of backwardness, and she depicts this result accordingly. (What relations of influence there might be between Anthem and these other dystopian fictions is a fascinating topic, but one where evidence is elusive.)

If the book’s linguistic center is the first-person pronoun, its imaginal center is light — the guttering candlelight of the collectivist dystopia, contrasted with the electric light that the protagonist reinvents, the latter symbolizing the fire that Prometheus of Greek myth stole to give to the human race, and, consequently, symbolizing as well the creative fire of the unfettered individual mind. (The theme of the gift of fire, and the giver’s punishment therefor, would recur in "The Fountainhead" and "Atlas Shrugged" as well.) The world of "Anthem" is in many ways a reflection, or more precisely an intensification and extrapolation, of the setting in which Rand initially conceived it — the Soviet Union under Lenin and Stalin, with its collectivist ideological conformity, economic stagnation, lack of privacy, and general dreariness (vividly portrayed in more literal terms in Rand’s semiautobiographical novel "We the Living").

Even the universal title of “brothers” in Anthem is an echo of the Soviet “comrades.” By the time Rand completed and published her story, however, she knew all too well that the virus of authoritarian collectivism was not confined to Soviet Russia; fascism and communism, two species of We-worship between which Rand saw little reason to choose, were dividing up Europe between them, while less advanced forms of the same syndrome were well entrenched in her adopted homeland of America. Against these trends Rand held up the vision of Anthem as a warning.

But contemporary ideologies were not Rand’s only target. Rand was a dedicated Aristotelian and a lifelong critic of Plato, and many of the features of Anthem’s dystopia, such as government assignment of professions, state regulation of breeding and reproduction, and abolition of private property and the family, seem drawn from the recommendations in Plato’s Republic. The prohibition of the word “I” in favor of “we” is likewise a natural development of Plato’s dictum in the "Republic" that all citizens should say “mine” and “not mine” about the same things — a proposal criticized by Aristotle, who warns in his "Politics" that the attempt to give a community the same degree of unity as a single individual is doomed to disaster.

Moreover, Equality 7-2521’s journey down into an abandoned subway tunnel to discover an artificial light source turns on its head Plato’s allegory of the cave, in which the wise man ascends from the cave of physical reality, lit by the artificial light of the senses, to discover the “real” world of abstract Forms, lit by a sun of pure ineffable intellect. By reversing Plato’s parable, Rand, in Aristotelian fashion, reorients the pursuit of knowledge away from the supernatural and back to this world, to empirical reality.

There are also passages in "Anthem", however, that seem potentially at odds with the Aristotelian orientation of Rand’s mature philosophy. The protagonist’s courage, integrity, and intellectual curiosity are described in terms that imply that they are innate; for example, he describes himself as having been “born with a curse” that has “always driven us to thoughts which are forbidden.” Such a suggestion clashes with Rand’s later insistence on the decisive role of choice and habituation in determining one’s character.

Moreover, Equality 7-2521, after rediscovering the concept of the ego, declares that “the choice of my will is the only edict I must respect” — a stance that the later Rand would denounce as “whim-worship,” insisting on the normative primacy of reason over will. Likewise, Equality 7-2521’s declaration, quoted earlier, that among “my thought, my will, [and] my freedom,” the “greatest of these is freedom” parts company with the mature Rand, who would surely have said that the greatest of these is thought; after all, in her later years, she would explain: “I am not primarily an advocate of capitalism, but of egoism; and I am not primarily an advocate of egoism, but of reason.”

"Anthem’s" differences from Rand’s later positions may just be nonliteral simplifications for artistic effect, or they may reflect the greater influence of Nietzsche on Rand’s early work. Her full diagnosis and repudiation of Nietzsche’s version of individualism would come in her next novel, "The Fountainhead". But already in Anthem we see a firm rejection of the glorification of domination that represents at least one strand in Nietzsche’s thought, a strand that had found a degree of aesthetic affirmation in some of Rand’s earlier work such as We the Living and Night of January 16th. “I shall choose friends among men,” Equality 7-2521 tells us, “but neither slaves nor masters.”

Clearly, by this point at least, Rand was conceiving of self-interest in Aristotelian terms, as requiring respect for the rights of others.

One aspect of Anthem that seems jarring and distracting, given the book’s overall theme of independence, is the heroine’s attitude of submissiveness toward the hero. It would seem that for Rand, saying “I” does not mean the same thing for women as for men. Indeed, Rand can be found championing women’s independence and women’s submissiveness alternately throughout her career; this is an inconsistency she never seems to have satisfactorily resolved.

Despite the dissimilarities in style and complexity between the two works, Anthem points forward to Rand’s best-known work, "Atlas Shrugged". The hero of "Atlas", John Galt, is also an inventor of something electrical that is unappreciated by a collectivist society, and his invention likewise doubles as a symbol of the power of the individual mind. Like "Anthem’s" protagonist, Galt is explicitly compared to Prometheus; and like "Anthem’s" protagonist, Galt sets out to undermine the ruling order by leading a covert exodus of individualists from it. Equality 7-2521’s promise to protect his citadel of individualism with a “barrier light as a cobweb” prefigures the “screen of light” that hides Galt’s Gulch from the outside world; and Equality 7-2521’s final vow — “I ask none to live for me, nor do I live for any others” — is a first draft of the vow that unites the Gulch’s inhabitants.

When Rand, in "Anthem", has Equality 7-2521 say that “this wire is a part of our body, as a vein torn from us, glowing with our blood,” so that there is no “line to divide this thread of metal” from “our hands which made it,” she is laying the groundwork for her later defense in Atlas of the producers’ right to own what they produce; Dagny Taggart in "Atlas" completes Equality 7-2521’s thought when she comes to the realization that engines and motors “are alive… because they are the physical shape of the action of a living power.”

Throughout "Atlas Shrugged", the specter of "Anthem’s" world is a perpetual threat; without “the power of thought and choice and purpose,” Dagny muses, the “motors would stop,” and “steel cylinders… would become stains of rust on the walls of the caves of shivering savages.” When Dagny feels “sudden, blinding hatred” against a weed she finds growing through a crack in the steps of an abandoned factory and uproots it “in rebellion against the weed’s impertinence, knowing of what enemy this was the scout,” or when the ordinarily mild-mannered Eddie Willers, at the end of Atlas, lunges with “murderous fury” toward the “small gray shape of a rabbit” sniffing at Eddie’s abandoned locomotive “as if he could defeat the advance of the enemy in the person of that tiny gray form,” the world of "Anthem"— the collapse of civilization, through the betrayal of the values on which it rests — is the advancing enemy that they seek to combat.

Even “Directive 10-289,” the regulation in "Atlas" that completes the conversion of the United States into a rigid authoritarian collective well on its way to becoming Anthem’s dystopia, can be converted to the format of the names in Anthem simply by shifting the hyphen one space to the left. Anthem is essentially the future that awaits the world of Atlas Shrugged if its protagonists fail in their struggle — and, Rand suggests, it is the future that awaits all of us if the sacred value of individuality is rejected or suppressed.

The text of Anthem has appeared in various slightly different versions over the years; the version presented here follows Richard Lawrence’s arguments, on his website Noblesoul.com/orc, concerning the best evidence as to Rand’s intentions."

"We like to think that we are rational beings; humane, conscientious, civilized, thoughtful. But when things fall apart, even just a little, it becomes clear we are not better than animals. We have opposable thumbs, we think, we walk erect, we speak, we dream, but deep down we are still routing around in the primordial ooze; biting, clawing, scratching out an existence in the cold, dark world like the rest of the tree-toads and sloths."

Today I will explain why America is going to hell, and probably deserves it. It has to do with conservatives and liberals, who may be thought of as Woofers and Tweeters. They should all be taken out and shot. The country would then be a much better place. Worth a try, anyway. Some observations:

(1) Liberals posit the equality of groups that are not equal, attribute the inevitable differences of outcome to discrimination, and try to eradicate them through regulation, affirmative action, and punishment of those noticing the differences. This doesn’t work, assuring a pretext for indignation that is non-depletable, like the liver of Prometheus. Here we have the bedrock of American politics.

(2) Liberals believe that we should all love one another, and hate those who don’t. This puts them in the morally invincible position of being against hatred. It also obscures the observable fact that most of us, certainly to include liberals, dislike a great many people, and that most groups detest a lot of other groups, or will if placed in contact with them. Distance is prerequisite to love.

(3) Groups hate each other, firstly, the greater their proximity. Secondly, the more they differ from one another, and, thirdly, the more power one has over another or the greater the apparent superiority of one over the other. The result is a spectrum of hostility running from surliness to severed heads.

This explains anti-antisemitism. Jews do not assimilate: Bill O’Toole in America does not think of himself as Irish, but Rachel Cohen thinks of herself as Jewish. This is not a sin, which has nothing to do with it. Proximity is close to a maximum since Jews are widely mixed through the population. Jews rise to positions of power, completing the triad. They can’t win.

There are those who believe that Homo sapiens came about through the mating of a Neanderthal with a pit bull. While this has not been confirmed, it fits the evidence.

(4) This brings us to the curious notion that diversity is a strength, which it obviously is not. Diversity is in fact the cause of most of the world’s troubles. If you doubt that diversity is a great evil, consider relations between:

Tamils and Sinhalese in Sri Lanka; Tutsis and Hutus in Burundi; Protestants and Catholics in Ireland; Israelis and Arabs in Palestine; blacks, whites, and browns in the United States; Anglophones and Francophones in Canada; Sunnis and Shias everywhere; Chinese and Indonesians in Indonesia; Chinese and Malays in Malaysia; Muslims and Hindus in India; blacks and whites in South Africa; Jews and everybody else everywhere; Spaniards and Basques in Spain; Spaniards and Catalans; Turks and Kurds; to name a few.

Then consider the proportion of riots, crime, looting, arson, lynchings, racial attacks, complaints of discrimination, ill will, court cases, and legislation that would have been avoided in America over the years since 1600 had there been only one race in the country. Thus sensible social policy should always be to keep different groups apart. Usually it is not that either of two warring groups is evil, but only that they are different. It is enough.

(5) The granularity of detestation descends well below the national and racial levels. New Yorkers and West Virginians do not like each other, nor the urban and the rural. Massachussetans and Mississippians do not like each other, though these do not actually kill each other. (In the mid-1800s, they did.) Those who like and those who despise President Trump hate each other. Women seem to hate men, which is why maintaining separate bars and clubs as sometimes retreats is wise.

(6) The only way to make different groups like each other is to make them stop being different. Blacks who move in reasonable though superficial comfort among whites do so by adopting white speech, dress, and mannerisms; the Irish and Italians in America by ceasing to be Irish or Italian while keeping the names. This suggests that good policy would be to allow, or encourage, different groups to separate from each other, or to force them to be like each other. The former approach leads to tranquility, the latter often to bloodshed. The current effort by Social Justice Warriors to make boys and girls into warped sexual interstitial amalgams produces angry, unhappy men and women.

(7) This in turn brings us to immigration, which amounts to the importation of people so they can hate each other. Open borders are supported by vaguely warm-hearted appeals to those who think with their glands. There are probably 500 million Indians, as many Chinese, hundreds of millions of Africans, more Muslims, and several hundred million Latin Americans who would like to emigrate to the United States. The question for Social Justice Warriors is how many of these should be admitted–none, all, or a specific figure between? Anyone who makes noises in favor of immigration should answer this question as otherwise he will be engaging in mere moral posing. But to choose one number is to exclude another number. Not inclusive, that.

(9) The two primary political errors are liberalism and conservationism (who hate each other: See?)

Conservatives are hostile, darkly suspicious of almost everything, tribal, but not actually delusional, living in something resembling the real world but taking a dim view of it.

Liberals construct in their minds a world as they think it should be, and then try to live in it. Their goodness of their ideas is so obvious, so reasonable, so heart-warmingly right that we should have a happy multicultural society, black and white together, and brown and yellow and what have you, kum bah yah, and learn from each other, vive la difference. It doesn’t detract from the appeal of this theory that it allows those holding it to feel really good about themselves.

An example of trying to live in fantasia is the statement by Obama, “Joe Biden and I know that women are as least as strong as men,” he said. “We’re stronger for it.” Women are not as strong as or stronger than men. Perhaps they should be. We may want them to be. It might be a good thing if they were. But they are not.If Obama believes otherwise, he is out of touch with reality–i.e., psychotic. People otherwise sane can be politically psychotic in this manner. Think of conspiracy theorists.

When it doesn’t work, the fault must lie with obstructive racist, sexist, ageist, homophobic, Islamophobic, et cetera at unbearable length. We just need somehow to teach people not to act like people.

(10) Most of Social Justice Warriorism deals more with feelings than with fact, logic, observation, or actual thought, all of which are regarded as nuisances and probably sexist. Thus there is no hope. We should all go home and slit our throats, leaving the world to bugs and things.”

“At this point I reveal myself in my true colors, as a stick-in-the-mud. I hold a number of beliefs that have been repudiated by the liveliest intellects of our time. I believe order is better than chaos, creation better than destruction. I prefer gentleness to violence, forgiveness to vendetta. On the whole I think that knowledge is preferable to ignorance, and I am sure that human sympathy is more valuable than ideology. I believe that in spite of the recent triumphs of science, men haven’t changed much in the last two thousand years; and in consequence we must try to learn from history. History is ourselves.

I believe in courtesy, the ritual by which we avoid hurting other people’s feelings, by satisfying our own egos. And I think we should remember that we are all part of a great whole, which for convenience we call nature. All living things are our brothers and sisters.”

Thursday, March 30, 2017

"The pile of felonies against people in the Deep State that illegally released classified information, for the purpose of embarrassing and destroying the incoming Trump Administration, keep stacking up. This crime is orders of magnitude worse that Watergate. The White House invited leaders of Congress to see documents from whistleblowers that point to improper handling of Intel surrounding the Trump team.

Meanwhile, the Democrats and their allies in the mainstream media (MSM) continue to push a false narrative of Trump and his team colluding with the Russians without one single piece of evidence of wrongdoing after 8 months of an FBI investigation. The leader of Russia, Vladimir Putin, said this week that Russian interference in the 2016 Presidential Election is “fictional, illusionary, provocations and lies, used for domestic political agendas.”

On the economy, two headlines from ZeroHedge.com point to a dangerous top forming in the markets. One proclaims “Margin Debt Hits New Record High but Analysts Say “Don’t Worry.” Another says “Fed’s Dudley: ‘I Don’t Think We Are Removing the Punch Bowl Yet.” If these headlines are not the sign of an extreme market top, I don’t know what it would take?" Join Greg Hunter as he talks about these stories and more the Weekly News Wrap-Up.

"Are millions of Americans about to see the big, juicy pensions that they were counting on to fund their golden years go up in flames in the biggest financial disaster in U.S. history? When Bloomberg published an editorial entitled “Pension Crisis Too Big for Markets to Ignore“, it simply confirmed what a lot of people already knew to be true. Pension funds all over America are woefully underfunded, and they have been pouring mind boggling amounts of money into very risky investments such as Internet stocks and commercial mortgages. Just like with subprime mortgages in 2008, this is a crisis that everyone can see coming well in advance, and yet nothing is being done about it.

On a day to day basis, Americans generally don’t think very much about pensions. Most of those that have been promised pensions simply have faith that they will be there when they need them. Unfortunately, the truth is that pension plans all over the country are severely underfunded, and this has already resulted in local fiascos such as the one that we just witnessed in Dallas.

But what happened in Dallas is just the very small tip of a very large iceberg. According to Bloomberg, unfunded pension obligations on a national basis “have risen to $1.9 trillion from $292 billion since 2007: "As was the case with the subprime crisis, the writing appears to be on the wall. And yet calamity has yet to strike. How so? Call it the triumvirate of conspirators – the actuaries, accountants and their accomplices in office. Throw in the law of big numbers, very big numbers, and you get to a disaster in a seemingly permanent state of making. Unfunded pension obligations have risen to $1.9 trillion from $292 billion since 2007." And of course that $1.9 trillion number is not actually the real number.

That same Bloomberg article goes on to admit that if honest math was being used that the real number would actually be closer to 6 trillion dollars: "So why not just flip the switch and require truth and honesty in public pension math? Too many cities and potentially states would buckle under the weight of more realistic assumed rates of return. By some estimates, unfunded liabilities would triple to upwards of $6 trillion if the prevailing yields on Treasuries were used. That would translate into much steeper funding requirements at a time when budgets are already severely constrained. Pockets of the country would face essential public service budgets being slashed to dangerous levels."

So where are all of these pensions eventually going to come up with 6 trillion dollars? That is a very good question. Ultimately, even if financial conditions stay as stable as they are right now, a whole lot of people are not going to get the money that they were promised.

But things will get really “interesting” if we see a major downturn in the financial markets. According to Dave Kranzler, if the stock market were to fall by 10 percent or more and stay there for a number of months, that “would cause every single public pension fund to blow up.” And Kranzler is also deeply concerned about the tremendous amount of exposure that these pension funds have to commercial mortgages.

Circling back to the mall/REIT ticking time-bomb, while the Fed can keep the stock market propped up as a means of preventing an immediate nuclear melt-down in U.S. pensions (all of which are substantially “maxed-out” in their mandated equities allocation), the collapse of commercial mortgage-back securities (CMBS) will have the affect of launching a nuclear sub-missile directly into the side of the U.S. financial system.

The commercial mortgage market is about $3 trillion, of which about $1 trillion has been packaged into asset-backed securities and stuffed into yield-starved pension funds. Without a doubt, the same degree of fraud of has been used to concoct the various tranches in these CMBS trusts that was employed during the mid-2000’s mortgage/housing bubble, with full cooperation of the ratings agencies then and now. Just like in 2008, with the derivatives that have been layered into the mix, the embedded leverage in the commercial mortgage/CMBS/REIT model is the financial equivalent of the Fukushima nuclear power plant collapse.

I have previously talked about the ongoing retail apocalypse in the United States which threatens to make so many of these commercial mortgage securities go bad. It is being projected that somewhere around 3,500 stores will close in the months ahead, and this is going to absolutely devastate mall owners. In turn, it is inevitable that a lot of their debts will start to go bad, and pension funds will be hit extremely hard by this.

But the coming stock market crash is going to hit pension funds even harder. Stocks are ridiculously overvalued right now, and if they simply return to “normal valuations”, pension funds are going to lose trillions of dollars. We are talking about a financial tsunami that will be absolutely unprecedented in our history, and yet investors continue to act like the party can last forever. In fact, we just learned that margin debt on Wall Street has just hit another brand new record high: "The latest data from the New York Stock Exchange show margin debt, or cash borrowed to buy shares, hit a record $528.2 billion in February, up from its prior high of $513.3 billion in January."

Of course my regular readers already know that margin debt also shot up to dramatic peaks just before the last two stock market crashes as well: "Prior periods when margin debt hit records occurred around stock market peaks, including 2000 when the dot-com stock boom went bust, and 2007 when stocks began to crater amid early signs of trouble in the housing market ahead of the 2008 financial crisis. Margin debt jumped 22% from the end of 1999 before peaking in March 2000 at $278.5 billion, the same month stocks peaked. In 2007, margin debt shot up to $381.4 billion in July, three months before stocks topped."

We are perfectly primed for the greatest financial disaster in American history, and yet very few people are sounding the alarm. This massive financial bubble is a ticking time bomb, and when it finally goes off it is going to wipe out virtually every pension fund in the United States.”

"Our agents have caught wind that inflation is eyeing a comeback... because of Trump’s tax cuts, or his infrastructure spending? Maybe because the Fed’s planning to drop $100s from helicopters? No… none of the above. Our agents inform us it has nothing to do with the Fed. Trump would actually trigger the inflation - but not because of his tax cuts or spending plans. For another reason entirely. But what?

We shine a spotlight on it momentarily. But first we turn it on the markets… No letup in “buying the dip” today. Lots of green. Dow up 69. S&P up seven. Nasdaq up 17. Even oil scratched out a gain. The only red we see today is gold - down 10 bucks and change. And so the great day of reckoning is postponed yet again...

But inflation could be returning to the stage. Not because of Trump’s tax cuts or his spending, but because of… bank deregulation. Yes, bank deregulation. The Fed’s balance sheet exploded from $800 billion pre-2008 to a handsome $4.4 trillion today. But official inflation - and we understand well any objections you may raise -can barely top 2%. That’s largely because the manna has been bottled behind the dams of the banking system, goosing asset prices.

It hasn’t broken through to Main Street. Why not? It’s not enough that the Fed prints money. That money must enter the economy through bank lending. But it hasn’t happened. The sluice gates are locked. One reason banks haven’t been lending is because of regulations enacted after the housing near-Armageddon of 2008. Dodd-Frank for one.

Financial advisory firm First Trust just released a report about it. From which: "Quantitative easing did not boost inflation in the U.S., nor did it boost economic growth. The reason: With one hand, the Fed was shoveling money into the economy, but with the other hand, it was regulating banks like never before. Higher capital requirements, Dodd-Frank and heavy-handed regulation kept banks from expanding loans at the same time they had more reserves and capital."

So the money’s been sloshing around the banking system instead of watering the thirsty seeds of economic growth. But the waters might soon come raining onto Main Street. Trump wants to take the regulatory jackboot off the necks of the banks. He vowed for example to do a “big number on Dodd-Frank” when he assumed office. And if Trump could get his repeals through Congress, the banks would find it easier to start lending again.

Why does that matter? Because that one act alone could send streams of dammed-up money pouring into the real economy - even if the Fed raises interest rates going forward.

First Trust: "If the Trump administration reduces regulation, the money supply will increase even if the Fed pays more to banks for holding reserves [monetary tightening]."

So if Trump lifts regulations and banks find it easier to lend, the money would finally wend its way onto Main Street. Then onto Maple and Oak and Elm streets, finally generating that long-anticipated inflation. There, a recipe for inflation - without tax cuts, without new spending. Just simple bank deregulation!

That would fuel even greater inflation expectations in turn. Followed by the Fed trying to choke them off. It’s already threatening at least two more rate hikes this year. So, maybe Trump actually produces the inflation markets have been expecting - even if he doesn’t get a dime’s worth of tax cuts or infrastructure spending. Then the battle of Trump vs. Yellen begins in earnest.

Below, David Stockman’s top analyst Lee Adler exposes the Fed’s “great interest rate illusion.” Did the Fed really raise rates March 15? And would higher rates even pop the stock bubble? Read on for the surprising answers.”

"The Great Interest Rate Illusion"

By Lee Adler

"Now that the Fed went ahead and done what all the Fedheads had said that they would do on March 15, the question is, what did the Fed actually do?

Did they tighten credit? No.

Did they reduce the size of the Fed's balance sheet? No.

Did they decrease the growth rate of the money supply? No.

Did they raise interest rates? No.

That last one may surprise you. I just said the Fed didn’t raise interest rates. What do I mean? Raising interest rates means raising banks’ costs of funds so that the banks will charge their customers higher rates. Banks make money when the amount of interest they can charge on the loans they make exceeds the amount of interest they have to pay depositors (savings, checking, etc.) - the cost of funds. The key takeaway is that, the lower the cost of funds, the more money banks make on the loans they make. And vice versa.

But the Fed hasn’t raised banks’ cost of funds at all. In fact, it’s lowered them. The Fed has merely increased the Interest on Excess Reserves (IOER) that it pays the banks for their $2.7 trillion in reserve deposits at the Fed. IOER is a de facto subsidy the Fed pays to the banks for the couple trillion in reserve deposits they hold at the Fed. Increasing it increases the cash subsidy to the banks.

Increasing the amount of interest the Fed pays on those reserves isn't a tightening. That's because raising IOER doesn't raise the banks' cost of funds. It lowers it. Raising IOER does not make it more difficult for the banks to make loans. It makes it easier. It increases their profits. By lowering their costs and increasing their profits, increasing IOER makes it easier for banks to make loans, not harder.

In other words, the Fed hasn't been raising bank costs at all since it began this rate cycle. Au contraire. The Fed has been increasing the interest it pays on excess reserves. Essentially, the Fed isn't tightening. It's easing. But the market doesn’t see it. It’s as if the Fed is the hypnotist and money market traders are the subjects of a great experiment in mass hypnosis.

The Fed had essentially told the market, "Keep your eyes on the spiral. You are getting sleepy, very sleepy. Now you believe that interest rates are rising." This was a done deal for the March FOMC meeting, with more to follow. Traders believe that the Fed has tightened, so they act as if the market is in fact tighter. But money is really much looser than the Fed would have us believe.

There has been no tightening because the Fed has not removed one dime of the massive excess cash it pumped into the banks over the course of QE. That pile of excess cash means that there are no restraints on loan growth other than borrowers desire to borrow. So, while the Fed did not tighten money one iota, rates moved up because of the power of suggestion. With trillions in excess cash lying around the Fed can only suggest.

What will the Fed do when the market wakes up? And how would the markets react to the reality that the Fed really doesn't control interest rates at all? Illusions don't last forever. But let’s just assume for the moment that the Fed actually did raise rates, does that mean the bubble will stop expanding? Actually, no. In the early and mid stages of a credit tightening cycle - which is what we’re in right now - such increases do nothing to reduce lending or curb speculative fervor. In fact, in an inflationary environment, raising rates normally even leads to increased lending, increased speculation, and increased inflation! All things that the Fed purportedly wants to curb.

Speculative lending won't be curtailed, and unfortunately, the stock market blowoff may prove more persistent. Eventually that will only lead to a bigger more intractable collapse. If you don't believe me, I can tell you that I'm old enough to have lived through just such a period as a young adult starting my career on Wall Street in the 1970s. More recently it happened in the Fed's last tightening cycle from 2004 to 2006.

Greenspan raised the Fed Funds target from 1% to 5%. The consumer price index (CPI) rose from 1.6% to a peak of 4.6% in September 2005, and stayed at 3.5% or higher until the end of the rate increase cycle. The increase in lending rates was supposed to slow credit growth. What happened? It grew faster.Loan growth was already red hot at near 7% at the beginning of the rate increases. By the end of 2005, loan growth was skyrocketing at an annual rate of more than 13%. We were in the midst of the greatest credit bubble in history. Finally, the S&P 500 was around 1125 at the beginning of the rate increase cycle in 2004. It rose to over 1300 in the middle of 2006, about a 16% increase. So much for interest rate increases tightening credit, slowing speculation, or reducing inflation. In fact just the opposite occurred over that 2 year period.

We all remember the late Great Housing Bubble (not to be confused with the current great housing bubble - lower case). According to the Federal Housing Finance Agency (FHFA), house prices inflated by an average 17% nationally during those 2 years. And FHFA's methodology suppresses the rate of increase. The hot bubble markets went up 25-30% per year!

So we don't need to go back to the 1970s to know that raising interest rates doesn't slow inflation and doesn't slow lending. We learned that very well again in the 2004-2006 experience. And we also learned especially that raising interest rates does not slow speculative bubbles.

In fact, rates never became punitive during the Great Housing Bubble, like they did under Paul Volcker in the early 1980s. In 2006, home prices were still rising at a rate well above the Fed Funds rate. The Bubble died of too much bad credit. The financial system crashed because it had fraudulently lent too much money under false pretenses. Once it became clear that too much bad debt had been created, the financial system collapsed. It wasn't because of high interest rates.

So the idea that the Fed raising rates will reign in speculation, curtail lending and keep inflation in check is patently absurd. Raising rates without actually tightening credit, could do the exact opposite just as it has in the past. No two cycles are exactly alike, but if past is prologue, this rate cycle will cause an increase in the amount of speculative borrowing.

It's too early to tell how this will play out and how the financial markets will respond. I suspect that this will end badly because it's based on a fraud perpetrated by the Fed. So far, money market traders have bought in, but the pressures of reality will soon intrude on the fantasy. Then the mass illusion currently in effect will end with a bang.”

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